A group of influential Republican legislators has filed a brief (PDF) with the U.S. Supreme Court calling for insurance subsidies to be invalidated in states that haven't established their own exchanges.
The 16 legislators are asking the Supreme Court to overturn a decision by the 4th U.S. Circuit Court of Appeals that the Internal Revenue Service acted appropriately in drafting regulations that allow exchange subsidies to be available regardless of whether a state has established its own insurance marketplace.
The petitioners include Sen. Orrin Hatch of Utah, the incoming chair of the Senate Finance Committee, Senate Republican Whip John Cornyn of Texas, Rep. Paul Ryan of Wisconsin, the incoming chair of the Ways and Means Committee, and Rep. Fred Upton of Michigan, chair of the Energy and Commerce Committee.
At issue in the King v. Burwell lawsuit is language in the Patient Protection and Affordable Care Act stating that subsidies will be made available through “an exchange established by the state.” The plaintiffs have argued that this prohibits Americans in the 34 states that rely on the federal exchange for enrollments to access subsidies.
Nearly 90% of HealthCare.gov customers have qualified for subsidies, which are available to households with incomes up to 400% of the federal poverty threshold. An analysis by the Urban Institute found that 7.3 million individuals would lose access to $36.1 billion in financial assistance in 2016 if the plaintiffs prevail.
“Policy choices that affect the public fisc on this scale are for Congress to make, not IRS bureaucrats,” reads the brief filed by the GOP legislators.
The Republicans also cite 2012 comments made by MIT economist Jonathan Gruber, who was a paid adviser to the Obama administration, as proof of the legislative intent to deny subsidies to residents of states that don't establish their own exchanges. “[I]f you're a state and you don't set up an Exchange, that means your citizens don't get their tax credits,” Gruber said at the time. “But your citizens still pay the taxes that support this bill. So you're essentially saying to your citizens, you're going to pay all the taxes to help all the other states in the country.”
Gruber was not involved in drafting the federal healthcare law and has disavowed those comments since they surfaced. Democratic committee chairs who worked on the legislation have indicated that their intent was for subsidies to be available to Americans irrespective of whether they live in a state that establishes an exchange. “None of us contemplated that the bill as enacted could be misconstrued to limit financial help only to people in states opting to directly run health insurance marketplaces,” they wrote in a recent op-ed piece in the Washington Post.
Arguments before the Supreme Court on the King v. Burwell case are slated for March. A ruling is expected in June.
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